Mountford’s mission

The emerging markets theatre took centre stage at Cisco’s worldwide analyst conference as the networking giant laid out its plans for future growth.

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By  Stuart Wilson Published  December 6, 2005

The emerging markets theatre took centre stage at Cisco’s worldwide analyst conference as the networking giant laid out its plans for future growth.

Covering some 129 countries, including the Middle East and Africa, the emerging markets theatre – headed up by Cisco’s former global channels supremo Paul Mountford – is a top priority for the vendor. Mountford’s mission is to get the emerging markets channel firing on all cylinders as quickly as possible.

Cisco reckons that it can continue to achieve annual global sales growth of 10% to 15% per annum, with the emerging markets playing a pivotal role in driving revenues higher. At present, the 129 countries covered by Cisco’s emerging markets contribute just 10% of the networking giant’s annual sales of just under US$25 billion.

That’s about US$2.5 billion from emerging market at present, but Cisco executives reckon that the theatre has the potential to grow its sales in excess of 40% a year. What this means is that the emerging markets theatre will play a critical role in determining whether or not Cisco hits its 10% to 15% global sales growth targets.

To drive its growth, Cisco is preparing to bet big and scale up its emerging markets staff resources and presence — including in the Middle East and Africa. Unlike other vendors, it seems that Cisco is prepared to make the up-front investment that truly reflects its belief in the region’s long-term potential for growth. This has to be seen as a positive step.

Too many vendors still have the wrong attitude when it comes to building up their presence in emerging markets, refusing to scale up until the revenues justify such an investment and consequently missing out on at least some of the opportunities. Cisco appears poised to buck that trend and simultaneously send out a powerful message to the ‘wait-and-see’ vendors too scared to really take the plunge.

Cisco also sent out a powerful message to the financial analysts and fund managers that cover its stock at its latest conference. If anything, the event opened their eyes to the global opportunities that exist for increased IT investment and challenged their views on the predominance of North America and Western Europe to drive the bulk of global sales. From education initiatives in Jordan through to a five-minute presentation on the nature of developments in Dubai and their impact and significance in a wider regional context, Cisco executives laid down the strategic importance of the Middle East as an important territory within the wider emerging markets theatre.

For Mountford, the creation of a dedicated emerging markets theatre has provided a new level of flexibility, management and resource allocation that will allow Cisco to come up with channel initiatives and business plans tailored to the unique needs of the countries covered.

In many ways, this fresh sort of approach has so far been lacking from global IT vendors. Too many have attempted to combine some of the chunks that make up emerging markets with more developed regions, resulting in a fragmented approach that is often the equivalent of attempting to bang a square peg through a round hole.

Where Cisco leads, others may follow. One other major IT components vendors is looking closely at the possibility of establishing a similar emerging markets theatre in 2006. When this organisational change is confirmed, it will once again highlight the growing need for global IT vendors to approach these markets in a specific way in order to fully capitalise on the opportunities that exist.

As vendors invest more and more resources on a local level, channel partners need to think carefully about the implications for their business models. As vendors commit more to a region, they will look for loyal partners that share their growth ambition.

Mountford’s mission is far from easy, but 2006 could well be the year that Cisco creates a first-mover advantage in emerging markets that its competitors will be hard-pressed to match unless they take similar steps now.

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